Anika International Pvt. Ltd., New Delhi V. DCIT, Circle- 2(2), New Delhi

ITA 3348/DEL/2018

AI Insights

The case involves Anika International Pvt. Ltd., which appealed against a penalty of Rs. 2,28,000 imposed by the Assessing Officer under section 271(1)(c) of the Income Tax Act, 1961 for alleged concealment of income and furnishing of inaccurate particulars of income. The primary legal contention was the vagueness of the notice issued under section 274, which did not clearly specify the grounds for the penalty. The Tribunal referenced several High Court judgments that mandated specificity in such notices to ensure that the assessee is adequately informed of the grounds they need to contest. Based on these precedents, the Tribunal found the notice to be legally insufficient and thus annulled the penalty.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131729 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 07-02-2023
• Assessment Year: 2014-2015
• Appeal Filed On: 07-05-2018
• Other Referred Cases: CIT vs. Manjunatha Cotton and Ginning Factory, Mr. Mohd. Farhan A. Shaikh Vs ACIT, PCIT vs. Sahara India Life Insurance Co. Ltd., CIT vs. SSA'S Emerald Meadows
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHAHRUK MALIK
• Section: 271(1)(c); 274; 73

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL DELHIBENCH ‘A’, NEW DELHI Before Sh. C. M. Garg, Judicial Member Dr. B. R. R. Kumar, Accountant Member ITA No. 3348/Del/2018 : Asstt. Year: 2014-15 Anika International Pvt. Ltd., F-402, 4 th Floor, Ras Villas, Plot No. D-1, District Centre, New Delhi 110017 Vs. DCIT, Circle-2(2), New Delhi (APPELLANT) (RESPONDENT) PAN No. AAACA5751F Assessee by : Mrs. Nida Sultan, CA & Sh. Shahruk Malik, CA Revenue by : Sh. Kanv Bali, Sr. DR Date of Hearing: 08.02.2023 Date of Pronouncement: 14.02.2023 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeal has been filed by the assessee against the order of the ld CIT(A)-I, New Delhi dated 05.03.2018. 2. The assessee has raised the following grounds of appeal: “1. The learned Assessing Officer has erred in raising a penalty u/s 271(1)(c) of the Income Tax Act, 1961 amounting to Rs. 2,28,000/-.” 3. Based on the facts on record, the facts of the case are examined from record on jurisdictional issue of initiation of penalty and subsequent levy of penalty. The Assessing Officer initiated penalty proceedings for concealment of income and furnishing of inaccurate particulars of income whereas the ITA No. 3348/Del/2018 Anika International Pvt. Ltd 2 penalty has been levied on furnishing of inaccurate particulars of income. 4. On this issue, we are guided by the following judgments: 1) Karnataka High Court: CIT vs. Manjunatha Cotton and Ginning Factory: 359 ITR 565 held that notice under section 274 should specifically state the grounds mentioned in section 271(1)(c) of the Act, i.e., whether it is for concealment of income or for furnishing of incorrect particulars of income. Sending printed form where all the grounds mentioned in section 271 are mentioned would not satisfy requirement of law. 2) Bombay High Court: Mr. Mohd. Farhan A. Shaikh Vs ACIT Section 271(1)(c): Penalty-Concealment-Non-striking off of the irrelevant part while issuing notice u/s 271(1)(c) of the Income Tax Act, order is bad in law. Assessee must be informed of the ground of the penalty proceedings only through statutory notice. An omnibus notice suffers from the vice of vagueness. 3) The Hon’ble jurisdictional Delhi High Court in the case of PCIT vs. Sahara India Life Insurance Co. Ltd. in ITA No. 475 of 2019, reiterated that notice under section 274 should specifically state the grounds on which penalty was sought to be imposed as the assessee should know the grounds which he has to meet specifically. 4) The aforesaid principle has been reiterated in the in the case of CIT vs. SSA'S Emerald Meadows: 73 taxmann.com 241 (Kar) [Revenue’s SLP dismissed in 242 Taxman 180] ITA No. 3348/Del/2018 Anika International Pvt. Ltd 3 5. Hence, respectfully following the order of the Hon’ble Jurisdictional High Court, since the AO has not been specified u/s 274 as to whether penalty is proposed for alleged ‘concealment of income’ OR ‘furnishing of inaccurate particulars of such income’, the penalty levied is hereby obliterated. 6. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 14/02/2023. Sd/- Sd/- (C. M. Garg) (Dr. B. R. R. Kumar) Judicial Member Accountant Member Dated: 14/02/2023 *Ajay Kumar Keot, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR